Upbit Hot Wallet Hack: Difference between revisions
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{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/upbithotwallethack.php}} | {{Imported Case Study 2|source=https://www.quadrigainitiative.com/casestudy/upbithotwallethack.php}} | ||
{{Unattributed | {{Unattributed Sources}} | ||
[[File:Upbit-sg-static.upbitit.sh/seo/upbit_global_facebook.png|thumb|Upbit]]Upbit was one of a series of exchanges which had previously undergone a government security inspection, which failed to detect vulnerabilities. | [[File:Upbit-sg-static.upbitit.sh/seo/upbit_global_facebook.png|thumb|Upbit]]Upbit was one of a series of exchanges which had previously undergone a government security inspection, which failed to detect vulnerabilities. | ||
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Upbit has stated that they will reimburse customers fully for the losses, and the site appear to be online now. From notices on the website, they significantly exceeded the 2 week time estimate. | Upbit has stated that they will reimburse customers fully for the losses, and the site appear to be online now. From notices on the website, they significantly exceeded the 2 week time estimate. | ||
This exchange or platform is based in South Korea, or the incident targeted people primarily in South Korea. | This exchange or platform is based in South Korea, or the incident targeted people primarily in South Korea.<ref name="thecoinrepublic-5" /><ref name="coindesk-29" /><ref name="ciphertrace-74" /><ref name="cointelegraph-130" /><ref name="slowmisthacked-1160" /><ref name="cryptoxdirectory-2276" /><ref name="youniversitytv-7677" /><ref name="cryptonews-7831" /> | ||
<ref name="thecoinrepublic-5" /><ref name="coindesk-29" /><ref name="ciphertrace-74" /><ref name="cointelegraph-130" /><ref name="slowmisthacked-1160" /><ref name="cryptoxdirectory-2276" /><ref name="youniversitytv-7677" /><ref name="cryptonews-7831" /> | |||
== About Upbit == | == About Upbit == | ||
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!Description | !Description | ||
|- | |- | ||
|November 1st, 2019 12:01:30 AM | |November 1st, 2019 12:01:30 AM MDT | ||
|Main Event | |Main Event | ||
|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. | |Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. | ||
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| | | | ||
|} | |} | ||
== Technical Details == | |||
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited? | |||
== Total Amount Lost == | == Total Amount Lost == | ||
| Line 78: | Line 80: | ||
== Ongoing Developments == | == Ongoing Developments == | ||
What parts of this case are still remaining to be concluded? | What parts of this case are still remaining to be concluded? | ||
== General Prevention Policies == | |||
== Prevention Policies == | |||
The primary cause of the loss was due to the funds being in a "hot wallet", an online wallet which the hacker was able to gain access to. Hot wallets are notorious for being breached, despite strong security and even in this case a government inspection. | The primary cause of the loss was due to the funds being in a "hot wallet", an online wallet which the hacker was able to gain access to. Hot wallets are notorious for being breached, despite strong security and even in this case a government inspection. | ||
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Under our proposed framework, exchanges need to keep aside some funds to cover losses, which are stored in a collective multi-sig pool held by exchange operators. A premium is paid by all exchanges, which is higher for hot wallets, encouraging platforms to store more funds offline, and acting as insurance in the case of any breach. We also believe that proper training and a basic certification for all platform operators makes good sense. | Under our proposed framework, exchanges need to keep aside some funds to cover losses, which are stored in a collective multi-sig pool held by exchange operators. A premium is paid by all exchanges, which is higher for hot wallets, encouraging platforms to store more funds offline, and acting as insurance in the case of any breach. We also believe that proper training and a basic certification for all platform operators makes good sense. | ||
== Individual Prevention Policies == | |||
{{Prevention:Individuals:Placeholder}} | |||
{{Prevention:Individuals:End}} | |||
== Platform Prevention Policies == | |||
{{Prevention:Platforms:Placeholder}} | |||
{{Prevention:Platforms:End}} | |||
== Regulatory Prevention Policies == | |||
{{Prevention:Regulators:Placeholder}} | |||
{{Prevention:Regulators:End}} | |||
== References == | == References == | ||
<references><ref name="thecoinrepublic-5">[https://www.thecoinrepublic.com/2020/01/21/south-korean-government-under-fire-as-3-more-crypto-platforms-hacked/ South Korean Government Under Fire As 3 More Crypto Platforms Hacked - The Coin Republic: Cryptocurrency , Bitcoin, Ethereum & Blockchain News] (Jan | <references><ref name="thecoinrepublic-5">[https://www.thecoinrepublic.com/2020/01/21/south-korean-government-under-fire-as-3-more-crypto-platforms-hacked/ South Korean Government Under Fire As 3 More Crypto Platforms Hacked - The Coin Republic: Cryptocurrency , Bitcoin, Ethereum & Blockchain News] (Jan 31, 2020)</ref> | ||
<ref name="coindesk-29">[https://www.coindesk.com/upbit-is-the-sixth-major-crypto-exchange-hack-of-2019 Upbit Is the Seventh Major Crypto Exchange Hack of 2019 - CoinDesk] (Feb | <ref name="coindesk-29">[https://www.coindesk.com/upbit-is-the-sixth-major-crypto-exchange-hack-of-2019 Upbit Is the Seventh Major Crypto Exchange Hack of 2019 - CoinDesk] (Feb 4, 2020)</ref> | ||
<ref name="ciphertrace-74">[https://ciphertrace.com/q4-2019-cryptocurrency-anti-money-laundering-report/ Q4 2019 Cryptocurrency Anti-Money Laundering Report - CipherTrace] (Feb | <ref name="ciphertrace-74">[https://ciphertrace.com/q4-2019-cryptocurrency-anti-money-laundering-report/ Q4 2019 Cryptocurrency Anti-Money Laundering Report - CipherTrace] (Feb 12, 2020)</ref> | ||
<ref name="cointelegraph-130">[https://cointelegraph.com/news/most-significant-hacks-of-2019-new-record-of-twelve-in-one-year Most Significant Hacks of 2019 — New Record of Twelve in One Year] (Feb | <ref name="cointelegraph-130">[https://cointelegraph.com/news/most-significant-hacks-of-2019-new-record-of-twelve-in-one-year Most Significant Hacks of 2019 — New Record of Twelve in One Year] (Feb 23, 2020)</ref> | ||
<ref name="slowmisthacked-1160">[https://hacked.slowmist.io/en/?c=Exchange SlowMist Hacked - SlowMist Zone] (Jun | <ref name="slowmisthacked-1160">[https://hacked.slowmist.io/en/?c=Exchange SlowMist Hacked - SlowMist Zone] (Jun 26, 2021)</ref> | ||
<ref name="cryptoxdirectory-2276">[https://cryptoxdirectory.com/hacked_2019 The 23 exchange hacks of 2019] (Aug | <ref name="cryptoxdirectory-2276">[https://cryptoxdirectory.com/hacked_2019 The 23 exchange hacks of 2019] (Aug 8, 2021)</ref> | ||
<ref name="youniversitytv-7677">[https://www.youniversitytv.com/crypto-blockchain/korean-self-regulatory-crypto-industry-body-under-question-after-12-crypto-exchanges-approved/ Korean Self-regulatory Crypto Industry Body Under Question After 12 Crypto Exchanges Approved | YOUniversityTV] (May 8, 2022)</ref> | <ref name="youniversitytv-7677">[https://www.youniversitytv.com/crypto-blockchain/korean-self-regulatory-crypto-industry-body-under-question-after-12-crypto-exchanges-approved/ Korean Self-regulatory Crypto Industry Body Under Question After 12 Crypto Exchanges Approved | YOUniversityTV] (May 8, 2022)</ref> | ||
<ref name="cryptonews-7831">[https://cryptonews.com/news/hack-worries-as-usd-79m-of-altcoins-transferred-from-upbit-5160.htm https://cryptonews.com/news/hack-worries-as-usd-79m-of-altcoins-transferred-from-upbit-5160.htm] (May 30, 2022)</ref></references> | <ref name="cryptonews-7831">[https://cryptonews.com/news/hack-worries-as-usd-79m-of-altcoins-transferred-from-upbit-5160.htm https://cryptonews.com/news/hack-worries-as-usd-79m-of-altcoins-transferred-from-upbit-5160.htm] (May 30, 2022)</ref></references> | ||
Revision as of 13:27, 1 May 2023
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Upbit was one of a series of exchanges which had previously undergone a government security inspection, which failed to detect vulnerabilities.
Although I found reports that Upbit had been attempting to deny the hack, I suspect that this was confusion over Upbit denying any further hacking (beyond the original ETH) was occurring.
Upbit has stated that they will reimburse customers fully for the losses, and the site appear to be online now. From notices on the website, they significantly exceeded the 2 week time estimate.
This exchange or platform is based in South Korea, or the incident targeted people primarily in South Korea.[1][2][3][4][5][6][7][8]
About Upbit
“The Upbit hack is currently the most recent one as the company announced in a blog post that on November 27, it lost 58 billion won – $49.2 million at the time – worth of ETH to hackers as they transferred the funds out of Upbit’s hot wallet to an unknown wallet.
In response, Upbit immediately moved all of its funds to cold wallets and also disabled all trading activity. The company also promised to return all funds to affected users.”
This exchange or platform is based in South Korea, or the incident targeted people primarily in South Korea.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| November 1st, 2019 12:01:30 AM MDT | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
Technical Details
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
Total Amount Lost
The total amount lost has been estimated at $49,200,000 USD.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
There do not appear to have been any funds recovered in this case.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
General Prevention Policies
The primary cause of the loss was due to the funds being in a "hot wallet", an online wallet which the hacker was able to gain access to. Hot wallets are notorious for being breached, despite strong security and even in this case a government inspection.
This type of breach can be avoided by handling withdrawals manually from air-gapped wallets. Ideally, multiple human beings should be signing off on each transaction, and wallets should come from multiple trusted supply chains. The exchange should maintain the lowest possible level of funding in any hot wallets, and be prepared for the full loss of all funds in their hot wallets at any time.
Under our proposed framework, exchanges need to keep aside some funds to cover losses, which are stored in a collective multi-sig pool held by exchange operators. A premium is paid by all exchanges, which is higher for hot wallets, encouraging platforms to store more funds offline, and acting as insurance in the case of any breach. We also believe that proper training and a basic certification for all platform operators makes good sense.
Individual Prevention Policies
No specific policies for individual prevention have yet been identified in this case.
For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.
Platform Prevention Policies
Policies for platforms to take to prevent this situation have not yet been selected in this case.
For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.
Regulatory Prevention Policies
No specific regulatory policies have yet been identified in this case.
For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.
References
- ↑ South Korean Government Under Fire As 3 More Crypto Platforms Hacked - The Coin Republic: Cryptocurrency , Bitcoin, Ethereum & Blockchain News (Jan 31, 2020)
- ↑ Upbit Is the Seventh Major Crypto Exchange Hack of 2019 - CoinDesk (Feb 4, 2020)
- ↑ Q4 2019 Cryptocurrency Anti-Money Laundering Report - CipherTrace (Feb 12, 2020)
- ↑ Most Significant Hacks of 2019 — New Record of Twelve in One Year (Feb 23, 2020)
- ↑ SlowMist Hacked - SlowMist Zone (Jun 26, 2021)
- ↑ The 23 exchange hacks of 2019 (Aug 8, 2021)
- ↑ Korean Self-regulatory Crypto Industry Body Under Question After 12 Crypto Exchanges Approved | YOUniversityTV (May 8, 2022)
- ↑ https://cryptonews.com/news/hack-worries-as-usd-79m-of-altcoins-transferred-from-upbit-5160.htm (May 30, 2022)